Severance Pay Calculator

Severance pay is money — and sometimes continued benefits — an employer gives an employee whose job is ending, usually through a layoff, reduction in force, or mutual separation. It is meant to cushion the gap between jobs. In almost all U.S. private-sector layoffs, severance is not legally required: there is no federal mandate. Instead it is offered at the employer's discretion or under a written severance policy, an employment or executive contract, or a collective bargaining agreement.

In practice, severance is almost always paid in exchange for something: your signature on a separation agreementthat releases the company from legal claims. That is why it's worth understanding what a fair package looks like and what you can ask for before you sign. Severance can be paid as a one-time lump sum or as “salary continuation” over several weeks or months, and it often comes bundled with a PTO payout, a health-insurance or COBRA subsidy, and occasionally outplacement help or a neutral reference.

Most employers anchor severance on your tenure and pay. The core formula behind almost every policy and behind the calculator on this page is:

A common structure is one to two weeks of pay per year of service, sometimes with a flat floor (say, a minimum of 4 weeks) and a cap (often 26 weeks). Your total package can then add accrued PTO and vacation payout, a prorated bonus or commission, a COBRA/health subsidy, and — for senior roles — equity treatment. The calculator above lets you enter those add-ons to build a full payout breakdown and an estimated net amount after tax.

Worked example: a $140,000 salary is $2,692/week. At 5 years and a 2-weeks-per-year policy, that's 10 weeks, or about $26,920 in base severance before PTO, bonus, and tax.

The size and shape of a package usually come down to a handful of factors:

• Years of service — the single biggest driver; longer tenure means more weeks.
• Seniority and role — executives and hard-to-replace specialists command more.
• Company policy or contract — a written plan or employment agreement can set a formula you can point to.
• Company size and financial health — larger, well-funded employers tend to pay more consistently.
• Reason for separation — a broad layoff or plant closing often triggers more than an individual exit.
• State law — mainly through final-pay and PTO-payout rules, and state “mini-WARN” notice laws.
• Your leverage — potential legal claims, a signed non-compete, or being 40+ can all strengthen your position.
• Timing — packages are sometimes richer early in a large restructuring than at the tail end.

The tables below are general market observations compiled from public reporting and common HR practice — useful for a gut check on whether an offer is light, average, or strong. They are not guarantees, legal entitlements, or promises. Actual packages vary widely by employer, state, role, and the specific agreement.

Typical severance by years of service

Typical severance by industry

Typical severance by seniority

Typical severance by company size

Benchmarks are directional. Confirm what actually applies to you by reading your company's severance policy, your employment agreement, and your written offer.

The gap between a small startup and a large public company is one of the widest in severance. Startups are often cash-constrained and may have no formal policy at all — offers can be a flat 2–4 weeks regardless of tenure, and in a cash crunch some early-stage companies offer nothing beyond earned wages and required PTO. Equity is common but frequently underwater or subject to short exercise windows.

Fortune 500 and other large employersusually run a structured, tiered severance plan: a formula tied to level and years, plus a COBRA subsidy, outplacement services, and sometimes an enhanced package during a large, publicly-scrutinized layoff. The trade-off is that these plans are more standardized and can be harder to negotiate line-by-line — though the “extras” (benefits, references, deadlines) usually still have flexibility.

Executive severance operates on a different track. Instead of the standard employee policy, it's typically governed by an individual employment agreementor a change-in-control / severance plan. Packages commonly run from several months to more than a year of base salary and frequently include:

• Cash severance defined as a multiple of base salary (and sometimes target bonus).
• Accelerated vesting of RSUs or options, especially on a change of control.
• A prorated or full annual bonus.
• Extended health benefits and executive outplacement.
• Specific, negotiated treatment of non-compete and non-solicit covenants.

Because these terms are individually negotiated, an executive's biggest leverage is often before joining (in the offer/agreement) and again at exit. Complex or high-value exits nearly always warrant a review by an employment attorney.

In a large reduction in force, employers usually roll out a standard severance program applied consistently across the affected group — partly for fairness and partly to reduce discrimination risk. That standardization cuts both ways: the formula is often reasonable, but individual cash amounts are less negotiable because HR is applying the same terms to hundreds or thousands of people.

Two things matter most in a mass layoff. First, if you're 40 or older and part of a group termination, the release must give you a longer review window (often 45 days) plus disclosure of the ages and job titles of who was and wasn't selected, under the Older Workers Benefit Protection Act. Second, a covered mass layoff may trigger the WARN Act (below), which is separate from severance. Check recent filings in your area with the WARN Tracker.

The federal Worker Adjustment and Retraining Notification (WARN) Actgenerally requires employers with 100+ employees to give 60 days' advance noticeof a qualifying plant closing or mass layoff. If an employer skips the required notice, affected workers can be owed pay and benefits for the notice period they didn't get.

Crucially, WARN pay is not severance. It's a remedy for missing notice, not a discretionary benefit. Some employers structure an offer so that severance and any WARN obligation overlap, so read how your agreement treats each. Several states have their own stricter “mini-WARN” laws (for example California, New York, New Jersey, and Illinois) with lower headcount thresholds or longer notice.

Employment is “at-will” in most states, and no state requires ordinary severance. But state law still shapes your payout in a few important ways:

• Final paycheck timing — many states require your last wages by a set deadline after separation, sometimes on the last day.
• PTO / vacation payout — some states (e.g. California) treat accrued vacation as earned wages that must be paid out; others leave it to company policy.
• Mini-WARN laws — state notice laws can add requirements beyond the federal WARN Act.
• Non-compete enforceability — varies enormously; some states barely enforce non-competes while others enforce reasonable ones.
• Unemployment offsets — states differ on how lump-sum vs continuation severance affects when benefits start.

Because these rules are state-specific and change, confirm the details that apply to you with your state labor department before acting.

Severance is fully taxable and treated as supplemental wages. What to expect:

• Federal income tax withholding — commonly the 22% supplemental flat rate, or 37% on amounts over $1 million in a year.
• FICA — Social Security and Medicare (7.65% combined, up to the Social Security wage cap) still apply.
• State income tax — applies in most states at their own rate.
• Bracket effects — a big lump sum adds to your annual income and can push part of it into a higher bracket, so withholding may not match your final tax.

Withholding is not the same as your final tax bill — you reconcile it when you file. To see an after-tax estimate for a lump sum, use the Severance Tax Calculator, and to see how the net amount stretches, the Layoff Runway Calculator.

A few patterns show up again and again in real offers:

• Severance is conditioned on a signed release of legal claims.
• A review deadline is set — often 21 days (individual) or 45 days (group) for workers 40+, plus a 7-day revocation right.
• Offers may be presented as “standard” and “non-negotiable,” even when extras still have room.
• Health coverage typically ends at the end of the month, with COBRA available afterward.
• Bonuses and commissions may be excluded unless you specifically raise them.
• Restrictive covenants (non-compete, non-solicit, non-disparagement, confidentiality) are frequently included by default.

• Signing on the spot. You almost always have time; use it to read and ask questions.
• Assuming it's non-negotiable. Many extras — COBRA, references, deadlines, PTO — are commonly granted on request.
• Ignoring the release. You're usually giving up legal claims; know what you're waiving.
• Forgetting the tax hit. Plan around the net amount, not the headline number.
• Overlooking benefits and equity. COBRA value and RSU/option timing can be worth more than a few extra weeks of cash.
• Not filing for unemployment early. Severance doesn't automatically disqualify you — check your state's rules right away.
• Skipping legal review on big or complex deals. For large packages, restrictive clauses, or age-40+ group layoffs, an attorney often pays for itself.

Almost everything in a package is potentially negotiable — the trick is knowing what's usually winnable and leading with the items that cost the employer little. Anchor your asks in objective factors (tenure, level, market benchmarks, company precedent), keep it collaborative and in writing, and pick two or three priorities rather than a long list.

What's usually negotiable

Levers, item by item

• Salary continuation vs lump sum — continuation can keep benefits active longer and smooth income; a lump sum gives you control and can matter for unemployment timing in some states. Ask which is offered and whether you can choose.
• PTO & vacation payout — often owed under state law regardless of the offer; confirm it's paid separately and not folded into the severance number.
• Bonus & commission — push for a bonus you've effectively earned, especially if the performance period has closed, and for commissions on booked deals.
• Health insurance & COBRA — an employer-paid COBRA subsidy for a few months is one of the most common and budgetable wins. Compare it against a Marketplace plan with the COBRA vs Marketplace Calculator.
• RSU acceleration & stock options — ask about vesting dates near your exit and whether the exercise window for vested options can be extended; these are harder wins but valuable.
• Outplacement services — low cost to the employer and frequently added on request.
• Reference letters — a neutral reference and an agreed departure message cost nothing and are almost always granted.
• Immigration considerations — if you're on a work visa, your timeline is different; confirm your last day and grace period and see the H-1B & Visa Layoff Guide.
• Non-compete clauses — ask to narrow the scope, geography, or duration, or to be paid for the restriction; enforceability depends heavily on your state.
• Non-disparagement — try to make it mutual so the company is bound too, and carve out honest responses to reference checks and legal obligations.

For scripts, an email template, and a strategy builder that tailors your asks, see the complete severance negotiation guide, and before signing, run through the should I sign this agreement? checklist.